T-Mobile acquisition of great concern to lawmakers, employees

NICK EATO, Seattle Post-Intelligencer

By NICK EATON, SEATTLEPI.COM STAFF

Updated 10:13 am, Thursday, August 11, 2011

This photo combination shows logos for AT&T, left, and Deutsche Telekom AG. AT&T Inc. on Sunday, March 20, 2011 said it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion, becoming the largest cellphone company in the U.S. (AP Photo)

Photo: Seth Perlman And Roberto Pfeil

This photo combination shows logos for AT&T, left, and Deutsche...

FILE - In this Jan. 25, 2007 file photo, the AT&T Michigan headquarters is shown in Detroit. AT&T Inc. on Sunday, March 20, 2011 said it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion, becoming the largest cellphone company in the U.S. (AP Photo/Paul Sancya, File)

Photo: Paul Sancya

FILE - In this Jan. 25, 2007 file photo, the AT&T Michigan...

In this Feb. 28, 2008 file photo the logo of Deutsche Telekom at the headquarters in Bonn is shown. AT&T Inc. on Sunday, March 20, 2011 said it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion, becoming the largest cellphone company in the U.S. (AP Photo/Frank Augstein,

U.S. Rep. Jay Inslee, D-Wash., wants a federal hearing in Seattle on AT&T's proposed acquisition of Bellevue-based T-Mobile USA. After expressing his concerns over the deal last month, the companies failed to adequately detail how the deal could affect T-Mobile consumers and employees alike, Inslee said.

The Federal Communications Commission and Department of Justice are reviewing the pending $39 billion acquisition, which would merge two of the country's four major wireless providers. Since T-Mobile USA, a subsidiary of Germany's Deutsche Telekom, is headquartered in Washington and employs more than 3,000 people in the state, the FCC should schedule a public hearing here, Inslee said.

"The answers I received did little to convince me that the merger of these two companies will benefit local jobs or provide customers with better service at affordable prices," Inslee, who sent the companies' CEOs a letter in July, said in a statement.

"American consumers face diminishing choice and higher bills at a time of increasing profitability for the dominant wireless companies in today's marketplace. As a critical public resource, the airwaves should be used to advance the public interest and not concentrated in the hands of a few and thereby limiting choices for consumers. The federal agencies involved should view any further consolidation in the wireless industry with considerable skepticism."

Skepticism like that of Free Press, a consumer advocacy group which created four satirical videos to raise important questions about the AT&T/T-Mobile deal.

Would consumers be harmed by reduced competitive choices in mobile? Would AT&T again have questionable monopoly power over an important industry? Will current T-Mobile customers see rate hikes? Will T-Mobile employees lose their jobs?

The latter question is of utmost concern to Inslee ... and to T-Mobile employees who reached out to seattlepi.com.

'Like a car-jacking'

As internal T-Mobile documents point out, the deal, announced on March 20, is not a merger but an acquisition. "From a true business perspective, this is an 'acquisition,' in which one company purchases all of the ownership interests in another company," the Bellevue company's internal website states.

"This means that technically we're being absorbed by AT&T," one T-Mobile employee, who wished to remain anonymous, wrote to seattlepi.com. "In reality, it's more like a car-jacking. AT&T will strip us for 'parts' (spectrum, towers, customers) and throw the drivers (employees) to the curb.

"After all, when you steal a car, you don't need the driver anymore."

This employee's sentiments appear to be widespread through the halls of T-Mobile's Factoria complex and across the country. T-Mobile employs about 38,000 workers in the U.S. at offices and retail locations.

Sure, some T-Mobile workers aren't as cynical, but many are realistic that they may not have jobs in a year.

Job cuts or job gains?

AT&T and T-Mobile have refused to directly answer pointed questions about possible layoffs. In a response to Inslee's July letter, AT&T's Tim McKone, executive vice president for federal relations, claimed the acquisition would result in more jobs.

"We believe that the transaction will be positive for job creation," McKone wrote. "Jobs are created when businesses grow and invest."

He cited a May analysis by the Economic Policy Institute which states, in part, that "investments in telecom wireless infrastructure, such as those projected by AT&T as the result of its proposed purchase of T-Mobile, could create tens of thousands of jobs over the next seven years."

Larry Cohen, president of the Communication Workers of America union, also supports the deal, expecting it to create more jobs in the long run.

Yet it is clear the Economic Policy Institute, the CWA and McKone were speaking of job gains across the entire wireless industry. Inslee, on the other hand, is concerned about immediate job cuts to the T-Mobile workforce in Washington state. Likewise, U.S. Sen. Al Franken, D-Minn., said in July that the merger "would likely involve thousands, perhaps even tens of thousands, of layoffs."

Inside T-Mobile, some employees are expecting layoffs of up to 30,000.

Layoffs seem likely, especially in the face of AT&T's statements that it expects savings of $10 billion by "consolidating platforms, customer care centers and headquarters organization."

Translation: Job cuts.

"AT&T has previously claimed, in an investor briefing, that $10 billion in savings would be achieved through reduced support and general and administrative expenses as a result of the merger," Inslee's office said in a news release. "AT&T did not address this discrepancy or offer a detailed explanation on the possible job losses, particularly in headquarters organization. In essence AT&T is publicly claiming that it will be able to create jobs while touting to investors the opportunity that exists to cut employment costs."

In his letter to Inslee, McKone echoed what AT&T has said for months: "AT&T also is sensitive to the fact that there will be overlapping functions between the two companies; however, as with prior mergers, we expect any necessary force adjustments to be achieved mostly through normal attrition."

'Natural attrition letters'

Meanwhile, T-Mobile employees have been receiving retention letters with incentives to stay with the company while AT&T's acquisition goes through. T-Mobile spokesman Glenn Zaccara confirmed that AT&T has provided retention packages.

The incentives include bonuses -- some as little as $1,500, seattlepi.com has learned -- and severance packages based on years of service. If employees stay, they get half of their bonus when the acquisition closes and the other half if they're still there after six months.

"We've been calling the retention letters 'natural attrition letters' because they might as well have said, 'You're screwed, run for the hills and don't let the door hit you on the way out,'" the anonymous T-Mobile employee said. "Anyone who can get out before the deal closes, will."

AT&T can categorize such job reductions -- employees who leave on their own accord -- as attrition, minimizing the apparent number of layoffs. But could you call it "natural" attrition?

"Management has given us no clue how many will be laid off," the employee said. "In fact they are feeding us B.S. about how AT&T always looks at the talent they acquire and makes individual decisions, so just keep doing what you're doing and your hard work will be recognized and rewarded.

"As I'm sure you're aware, in these types of multi-billion dollar deals, whole departments and divisions can be wiped out with the stroke of a pen from a person thousands of miles away who has never met any of the people involved."

Another T-Mobile employee expressed frustration on the company's internal website:

Really pretty silly to think that you would give us any straight answers. The idea that AT&T hasn't already made decisions on how to handle the acquisition when it is approved is ridiculous. This is a multi-billion dollar deal. You don't go buy a $2000 TV without knowing where you are going to put it.

To the executive team- Stop treating us like we are five years old.

To the employees- Stop acting like five year olds.

'No reason to panic'

Meanwhile, T-Mobile is trying to keep its business going despite the looming acquisition.

Eric Schlumpf is the company's new vice president for the Pacific Northwest region. From an office in Bothell, he directs marketing and sales strategies in Washington, Oregon, Idaho and Hawaii.

His position represents a corporate restructuring that began before AT&T and T-Mobile agreed to the acquisition. The company is focusing more on regional campaigns to better target potential customers in various competitive climates.

Yet Schlumpf is finding himself also dealing with employee morale. Despite his best efforts, it's hard to keep the AT&T acquisition from being on the top of workers' minds.

"I think the question on the table today is what their job's going to look like after the deal's done," Schlumpf told seattlepi.com. "There's no reason to panic. Take a breath, there's nothing happening yet. You have a job."

But right now in Bellevue, there are nearly 3,000 T-Mobile employees redrafting their résumés and building up connections on LinkedIn. Many are uncertain, worried and feeling disenfranchised.

Schlumpf is telling his workers that they are building skills they need not only as T-Mobile employees, but for their overall careers. They should think of their future, he said.

"Working in corporate America, the reality is there's uncertainty all the time," said Zaccara, the T-Mobile spokesman. "The best thing you can do is focus on what's right ahead of you."